MENU

Slater & Gordon Limited launches giant compo claim against AMP Limited

Under fire wealth management and financial advice business AMP Limited (ASX: AMP) is not out of the woods yet as it is reportedly facing up to five different class actions from fee-hungry lawyers and their shareholder clients.

Slater & Gordon will undertake its claim work for shareholders on a ‘no win, no fee’ basis which sounds good for aggrieved shareholders until you consider it will likely calculate subtantial commission fees on a basis of net compensation awarded.

The litigation funder named as Therium will also want its cut of the total compensation awarded assuming the action is successful.

Slater & Gordon will claim that AMP failed to disclose to the ASX some egregious business practices that came out in the wash during AMP’s pasting at the Royal Commission into financial services.

The lawyers will allege that AMP failed to notify investors that it charged clients fees for no services, and misled ASIC over its unusual fee-charging practices.

In response the AMP share price has hit a multi-year low of $3.67, while this is a business I have warned investors to avoid multiple times over the past four years and long before the Royal Commission allegations occurred.

Paying a huge compensation bill to out-of-pocket investors is a one-off problem AMP faces, but more generally its business model has struggled for a long time.

The life insurance sector in particular has faced headwinds, with merger activity increasingly prevalent in response. While the problems at AMP’s financial advice business speak for themselves and show how management competence at the sprawling organisation is nowhere near where it needs to be.

If you want to make money investing in the financial services space you must look to quality operators run for shareholders not just members of staff. As such I’d still favour Macquarie Group Ltd (ASX: MQG) as one of the few investment grade financial services businesses on the local market.

7 of 8 People Are Clueless About This Trillion-Dollar Market

One of our investors has recently returned from a research trip to Silicon Valley... and has a warning for fellow investors:

Because he works for an organization dedicated to spreading great investing ideas, his video report is free today... so you can see it and decide for yourself.

Don't miss your chance click here to learn about this warning and how you might be able to profit!

Motley Fool contributor Tom Richardson owns shares of Macquarie Group Limited.

You can find Tom on Twitter @tommyr345

The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

The 5 mining stocks we’re recommending in 2019…

For decades, Australian mining companies have minted money for individual investors like you and me. But if you believe the pundits and talking heads on TV, those days are long gone. Finito! Behind us forever…

We say nothing could be further from the truth. To earn the really massive returns, you’ve got to fish where others aren’t fishing—and the mining sector could be primed for a resurgence. That’s why top Motley Fool analysts just revealed their exciting new research on 5 ASX miners they believe could help you profit in 2019 and beyond…

Including:

The best way we see to play the global zinc shortage… Our #1 favourite large-cap miner (hint: it’s not BHP)… one early-stage gold miner we think could hit the motherlode… Plus two more surprising companies you probably haven’t heard of yet!

For free access to our brand-new research, simply click here or the link below. But be warned, this research is available free for a limited time only, and we reserve the right to withdraw it at any time.

Click here for your FREE report!